Car loan advice

xiodene

Hi guys, I have been a long time lurkers but this is my first post so be gentle!

Right, basically I want a new car and I have a plan regarding loans and wanted to see what people thought.

My idea was to take out a loan of around 7.5k over 5 years. This will give me relatively low monthly payments which will allow me to continue adding to my savings.
As soon as my current car sells I would put all of that money (4k ish) into the loan as an over payment. I will also most likely sell my motorbike and overpay with that money as well (2k)
During all this I will be making monthly overpayments of £50/100.

What do people think of this plan?

Obviously in an ideal world I would sell the bike and car first and borrow less (or save for longer)
The problem is the car im looking to buy is rare. I would either be in the position of having the money but unable to find a nice example for sale, or find a nice one but unable to sell cars and bikes fast enough to secure the car!

Sorry that was a bit long winded! any advice would be great, thanks!
Matt:j

Curr946

Well, a loan may not be the best option. Mosty loans do not like large over payments, or will still expect the full amount of interest.
Have you thought about a 0% credit card? Did you need to pay cash? Both barclaycard and virgin allow money transfers to your bank during a 0% offer, and both have good deals on just now. If you cleared before 0% offer ended your quids in..

xiodene

I have looked into a few of the loans TAC's. They all say that they allow overpayments. They also say that overpayments will lover the amount that needs to be paid back.

"Any partial early repayment of your loan will reduce the amount on which we charge interest from the day after we receive your payment. The effect of any partial early repayment will be to reduce the Term of your loan." Taken from the nationwide loans legal page.

SO the way I look at it is that I have the low monthly repayments if I need them any month. But I get I should be able to pay it back very early with much less interest.

I did think about a 0% interest cards, but as I will most likely be paying with cash and its such a large amount of money, I did not think it would be possible.

Thanks for your reply though